Custom Truck One Source, Inc. (CTOS) Reports Record Fourth Quarter and Full-Year 2025 Results, Announces 2026 Outlook and Segment Realignment
Key Highlights for Investors
- Record Revenue: CTOS delivered record fourth-quarter revenue of \$528.2 million (up 1.4% YoY) and record full-year revenue of \$1.94 billion (up 7.9% YoY).
- Improved Adjusted EBITDA: Adjusted EBITDA hit \$120.7 million for the quarter (+18.4% YoY) and \$383.6 million for the year (+12.9% YoY).
- Fleet Utilization and OEC: Fleet utilization reached 83.6% (highest in nearly three years). Average OEC on rent for the quarter rose 13.7% YoY.
- Sales Backlog: Sales order backlog ended 2025 at \$335.3 million, up \$55.5 million sequentially.
- Net Income/Loss: Quarterly net income was \$20.9 million (down from \$27.6 million YoY), while full-year net loss was \$31.1 million (vs. \$28.7 million net loss in 2024).
- Inventory Reduction: Inventory declined by over \$100 million in Q4, expected to enhance working capital and cash flow in 2026.
- Debt Position: Net debt stood at \$1.65 billion with a net leverage ratio of 4.3x, targeted to fall below 4x by end of 2026 and below 3x in 2027.
- 2026 Guidance: Revenue expected to grow 3%-9% in 2026 to \$2.01-\$2.12 billion, with Adjusted EBITDA expected to increase 7%-13% to \$410-\$435 million. Levered free cash flow is expected to exceed \$50 million.
- Segment Realignment: From Q1 2026, CTOS will reorganize into two segments: Specialty Equipment Rentals (SER) and Specialty Truck Equipment and Manufacturing (STEM), to better reflect capital intensity and margin profiles.
Detailed Financial Review
Fourth Quarter and Full-Year Segment Performance
- Equipment Rental Solutions (ERS):
- Q4 rental revenue grew 13.5% YoY to \$137.2 million, driven by higher fleet utilization (up to 83.6%) and increased OEC on rent (+13.7%).
- ERS total revenue for Q4: \$207.1 million (+20.1% YoY); full-year revenue: \$701.0 million (+17.2% YoY).
- ERS gross profit rose 21.6% YoY in Q4; adjusted gross profit up 19.1%.
- 35.6% YoY increase in used rental equipment sales due to year-end buyouts.
- Truck and Equipment Sales (TES):
- TES Q4 revenue fell 7.7% YoY to \$283.9 million, as customers pulled forward purchases mid-year ahead of anticipated tariffs/price hikes and deferred some deliveries into 2026.
- Full-year TES revenue was just under \$1.1 billion, up 4% YoY.
- TES gross profit in Q4 down 13.1% YoY, impacted by pricing pressures, though order intake was robust, increasing backlog by \$30 million sequentially.
- Aftermarket Parts and Services (APS):
- Q4 APS revenue decreased 8.5% YoY to \$37.1 million due to softer demand in parts and lower service activity.
- Gross profit margin was stable at 27.0%.
Other Key Financials
- Gross Profit: Q4 gross profit was \$123.1 million (+3.9% YoY); full-year gross profit was \$411.9 million (+5.5% YoY).
- Adjusted Gross Profit: Q4 adjusted gross profit was \$179.8 million (+7.3% YoY); full-year \$627.5 million (+9.4% YoY).
- Operating Income: Q4 operating income was \$52.0 million, down from \$67.3 million in Q4 2024 (which included a \$23.5 million gain on a sale-leaseback transaction).
- Cash Flow & Liquidity: Operating cash flow for 2025 was \$310.1 million (up from \$122.0 million in 2024). Cash and equivalents stood at \$6.3 million, with \$248.1 million available under the senior secured credit facility and potential to increase by \$200.8 million.
Strategic and Operational Updates
2026 Outlook and Guidance
- Consolidated Revenue: \$2.01-\$2.12 billion (+3%-9% YoY).
- Adjusted EBITDA: \$410-\$435 million (+7%-13% YoY).
- Segment Guidance:
- SER (ERS): \$725-\$760 million
- STEM (TES): \$1,125-\$1,200 million
- APS: \$155-\$160 million
- Free Cash Flow: Levered free cash flow expected to exceed \$50 million.
- Deleveraging: Net leverage ratio targeted to fall below 4x in 2026 and below 3x in 2027.
Price-Sensitive and Shareholder-Relevant Items
- Record revenue and Adjusted EBITDA, as well as efficiency gains in fleet utilization and significant inventory reduction, are positive signals for future profitability and cash flow—a potential share price catalyst.
- The segment realignment and more granular reporting may improve transparency and could drive re-rating by investors focused on segment-specific capital returns and margins.
- Guidance for continued growth in revenue and profits, with improved cash generation and a clear deleveraging trajectory, could reassure shareholders and attract new investors.
- Risks remain: significant debt load, exposure to tariffs, supply chain, and capital markets are ongoing concerns. Investors should monitor execution on cash flow and leverage reduction, as well as macroeconomic headwinds detailed in the risk factors.
Conference Call Details
CTOS will host a conference call at 9:00 a.m. ET on March 10, 2026. Details for accessing the call and webcast are provided on the company’s investor relations website.
About CTOS
Custom Truck One Source, Inc. is one of the largest providers of specialty equipment, parts, tools, and services to critical infrastructure markets in North America, with a coast-to-coast rental fleet of over 10,400 units.
Disclaimer
This article is for informational purposes only and does not constitute investment advice. Financial results, guidance, and outlook discussed are forward-looking and subject to risks, uncertainties, and assumptions that may cause actual results to differ materially from those indicated. Investors should review the company’s official filings and risk disclosures before making any investment decisions.
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